Mercer has launched a new climate change analytics and advice option for institutional investors who want to limit global warming to just 1.5 degrees, as outlined in the Paris Agreement.
Its Analytics for Climate Transition (ACT) solution will help investors construct climate resilient portfolio on a multi-year timeframe, to ensure a 45 per cent reduction in carbon emissions by 2030 and net zero emissions by 2050.
ACT is being offered to Mercer’s investment consulting clients worldwide and will be leveraged to support climate transition strategies across its $304.5bn global assets under management on behalf of its investment solutions clients.
Mercer global business leader, responsible investment Helga Birgden says: “Many investors are not yet equipped to invest in a decarbonising economy, and some don’t know where to start.
“Our analytics and advice will help investors transition their portfolios to take on the challenges of managing climate risk, in their endeavour to meet return objectives while staying on target for a net zero outcome.”
She says ACT was developed because institutional investors are seeking ways to assess the companies they are invested in with respect to their commitment and ability to, transition to a net zero economy by 2050, with an important milestone of 45 per cent emissions reduction by 2030.
Mercer says this solution helps investors set portfolio investment baselines; assess portfolio opportunities; establish targets and produce implementation plans that can be integrated with strategy and portfolio construction decisions.
Mercer head of responsible investment, Europe Kate Brett adds: “As investors increasingly seek to set net zero targets it is vital that they are equipped with the necessary tools and analysis to do so.
“The analytics and advice builds on Mercer’s pioneering climate scenario analysis and aims to support investors in setting net zero targets, outlining a pathway to net zero and measuring their progress as the transition progresses.”
Mercer’s framework and analytics draw on multiple data providers and metrics to assess portfolios across a spectrum of carbon risk, with portfolios ranked from low transition capacity (gray investments) to investments that are low carbon risk/zero carbon already, or are providing climate solutions (green investments).
Its says currently the majority of companies in investor portfolios fall somewhere in between the two sides.